FOREX-Dollar up vs euro as ECB holds rates steady, launches review

* ECB launches review that will redefine its mission and
tools
* Yuan has lost more than 1% since Monday as virus spreads

(Updates to U.S. afternoon)
By Saqib Iqbal Ahmed
NEW YORK, Jan 23 (Reuters) - The dollar rose against the
euro on Thursday after the European Central Bank held interest
rates steady and launched a broad review of its policy that was
likely to see new President Christine Lagarde redefine the ECB's
main goal and how to achieve it.
"The ECB left policy and guidance unchanged at today's
meeting, with the ECB still arguing that the overall situation
justifies the negative interest rate environment and still
stressing that it remains ready to adjust all measures if
necessary, with the balance of risks still tilted to the
downside," Natascha Gewaltig, director of European economics at
Action Economics, said in a note.
The euro zone's central bank has fallen short of its
inflation target of just under 2% for years, even after
Lagarde's predecessor, Mario Draghi, launched increasingly
aggressive stimulus measures.
"We will not leave any stone unturned and how we measure
inflation is clearly something we need to look at," Lagarde
said.
"Basically, what she is saying is that they are reassessing
some of the tools they have been using for basically a decade to
booster up inflation to no avail," said Minh Trang, senior FX
trader at Silicon Valley Bank in Santa Clara, California.
The euro was 0.32% lower against the greenback at $1.1055,
after slipping as low as $1.1037, its weakest since Dec. 2.
The Japanese yen strengthened and China's yuan fell to a
two-week low on Thursday as investors grew more anxious about
the spread of a virus in China.
The World Health Organisation (WHO) said on Thursday it was
"a bit too early" to declare a new coronavirus a global health
emergency as China put millions of people on lockdown amid an
outbreak that has killed 18 people and infected more than 630.
The moves up in the safe-haven yen and down in the yuan were
measured, suggesting investors were not yet panicking about the
virus.
Against the yen, which tends to draw investors during times
of geopolitical or financial stress, the dollar was 0.32% lower
at 109.48 yen.
The dollar gained 0.28% versus the offshore Chinese yuan
CNH= to 6.9277 yuan. The Chinese currency has now lost more
than 1% of its value since it touched six-month highs on Monday.
The onshore yuan CNY=CFXS is on course for its worst week
since August. Sterling was 0.19% lower, but remained close to a 2-week
high hit on Wednesday, as data this week reduced market
expectations of a interest rate cut at next week's Bank of
England policy meeting. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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